Discontinued Operations

6 Months Ended

Jul. 30, 2011

Discontinued Operations

7. Discontinued Operations

The Company’s discontinued operations include the Talbots Kids, Mens and U.K. businesses, all of which ceased operations in 2008, and the J. Jill business which was sold to Jill Acquisition LLC (the “Purchaser”) on July 2, 2009. The operating results of these businesses have been classified as discontinued operations for all periods presented, and the cash flows from discontinued operations have been separately presented in the condensed consolidated statements of cash flows.

The income (loss) from discontinued operations for the thirteen and twenty-six weeks ended July 30, 2011 include on-going lease and other liability adjustments related to the J. Jill, Talbots Kids and Mens businesses, offset by favorable adjustments to other assets and lease liabilities including the first quarter 2011 settlement of one of the two remaining J. Jill store leases not assumed by the Purchaser in the sale of J. Jill. The income from discontinued operations for the thirteen and twenty-six weeks ended July 31, 2010 is primarily comprised of favorable adjustments to estimated lease liabilities including the second quarter 2010 settlement of a portion of the vacant Quincy, Massachusetts office space previously used for the J. Jill business and the first quarter of 2010 settlement of four J. Jill store leases not assumed by the Purchaser in the sale of J. Jill. The results for the thirteen and twenty-six weeks ended July 31, 2010 also include favorable adjustments to other assets, partially offset by on-going lease and other liability adjustments related to the J. Jill, Talbots Kids and Mens businesses. While the income from discontinued operations for the thirteen weeks ended July 31, 2010 reflects income tax expense of $0.2 million, recorded to reverse a first quarter of 2010 estimated income tax benefit, the income (loss) from discontinued operations for the thirteen weeks ended July 30, 2011 and twenty-six weeks ended July 30, 2011 and July 31, 2010 reflect no net income tax expense (benefit).

At January 29, 2011, the Company had remaining recorded lease-related liabilities from discontinued operations of $6.3 million. During the twenty-six weeks ended July 30, 2011, the Company made cash payments of approximately $1.4 million, and recorded additional net expense related to lease liability adjustments of $0.2 million, resulting in a total estimated remaining recorded liability of $5.1 million as of July 30, 2011. Of this $5.1 million liability, $3.0 million, expected to be paid within the next twelve months, is included in accrued liabilities, and the remaining $2.1 million, expected to be paid thereafter through 2019, is included in deferred rent under lease commitments.